Volkswagen offers $1,000 and free towing as gesture of goodwill

Nov. 9, 2015

Updated 10:42 p.m.

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Volkswagen announced Monday it will give U.S. owners of 2-liter diesel vehicles a $500 prepaid Visa card, an additional $500 redeemable at VW dealers and three years of free roadside assistance. GENE J. PUSKAR, THE ASSOCIATED PRESS

“We are working tirelessly to develop an approved remedy for affected vehicles,” said Michael Horn, Volkswagen Group of America president and chief executive, in a statement Monday. MICHAEL SOHN, THE ASSOCIATED PRESS

Volkswagen announced Monday it will give U.S. owners of 2-liter diesel vehicles a $500 prepaid Visa card, an additional $500 redeemable at VW dealers and three years of free roadside assistance. GENE J. PUSKAR, THE ASSOCIATED PRESS

To redeem VW's goodwill package

Diesel owners can find information on the Goodwill Package and check their eligibility at VWDieselInfo.com. Users will need their vehicle identification number to determine whether their vehicle is eligible. Eligible consumers must be the registered owner or lessee of a 2-liter Volkswagen TDI vehicle as of Nov. 8.

Monday developments

• Fitch Ratings on Monday downgraded the automaker's credit rating to BBB+ from A, saying the cut reflects "corporate governance, management and internal control issues." Fitch's new rating puts VW at the third-lowest investment-grade scale and follows similar revisions by Moody's Investors Service and Standard & Poor's.

• Germany's Transport Ministry said that of the 2.4 million vehicles recalled for fixes in Germany, regulators "currently expect that approximately 540,000 will also need hardware changes" as well as software changes. It says Volkswagen will inform owners of the details.

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In its ongoing effort to control the negative fallout from a growing emissions scandal, Volkswagen announced Monday it will give U.S. owners of 2-liter diesel vehicles a “goodwill package” consisting of a $500 prepaid Visa card, an additional $500 redeemable at VW dealers and three years of free roadside assistance.

“We are working tirelessly to develop an approved remedy for affected vehicles,” Michael Horn, Volkswagen Group of America’s president and chief executive said in a statement. “In the meantime, we are providing this goodwill package as a first step towards regaining our customers’ trust.”

In September, those VW vehicles were among 482,000 cars the German automaker admitted to rigging with so-called defeat device software that engaged the cars’ pollution controls only when they were being emissions tested. During normal driving, the cars emitted as much as 40 times the legal limit.

On Nov. 2, the U.S. Environmental Protection Agency announced additional diesel vehicles from Volkswagen, Audi and Porsche also had violated the federal Clean Air Act for intentionally installing software to circumvent emissions standards – a claim Volkswagen denies.

The additional affected models are equipped with 3-liter diesel engines for the 2014, 2015 and 2016 model years, including the 2014 VW Touareg, 2015 Porsche Cayenne, and 2016 Audi A6 Quattro, A7 Quattro, A8, A8L and Q5 – none of which are eligible for the cash incentives, VW said Monday.

Audi is expected to launch a similar goodwill program later this week for its 2010 to 2015 model year A3s found with emissions-defeating software in September.

Volkswagen of America is already offering existing VW owners $2,000 toward the purchase or lease of new gasoline and hybrid models, and additional cash bonuses to dealers of at least $2,000 for the gas-powered versions of popular models that had been affected by the diesel scandal, including its Passat and Jetta.

“When a party is injured, one of the most basic ways to make amends is with cash, so it is not surprising that Volkswagen is using cash to compensate owners of its noncompliant diesel-powered vehicles,” said Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book in Irvine.

“We have suggested from the beginning of the controversy that VW was likely to not only fix the offending vehicles, but also to provide an additional offer – cash payment, fuel debit card, dealer credit – that would in some ways make up for the hassle and potential loss suffered by its diesel owners.”

Whether owners will be satisfied is an open question.

Kelley Blue Book identifies two types of VW diesel owners – those who are extremely angry about the cheating scandal who won’t be mollified by cash and owners who are still enamored of their car’s driving dynamics and fuel economy and unlikely to give up on VW or diesel.

The majority of affected VW diesel owners are still in love with their cars, according to Kelley Blue Book; their greatest concern is how a VW fix will impact their cars’ performance.

Accepting the goodwill package will not prevent VW diesel owners from filing future claims against the company, according to the Seattle-based law firm Hagens Berman Sobol Shapiro, which last month filed a class-action lawsuit in California demanding the company immediately buy back affected diesel vehicles.

“There is no reason owners should not register for and take advantage of the Goodwill Package,” the law firm said in a statement. The law firm does, however, advise owners to “pay careful attention to any documents you are asked to sign in connection with the Goodwill Package.”

Volkswagen is also reassuring diesel owners who take advantage of the program.

“Affected customers eligible for the Goodwill Package are not required to sign a release of claims in order to receive the package,” said VW spokesman Darryll Harrison.

Since Sept. 18, when VW publicly admitted it had installed defeat device software on many of its diesel cars to intentionally circumvent federal emissions standards, the company has been largely mum about its plans.

Volkswagen has not yet recalled the 482,000 diesels it sold in the U.S. since 2009 with the software, nor has it announced a specific solution. But the emissions issue is likely to take years to resolve.

On Oct. 8, Volkswagen Group of America’s Horn testified before the House Energy and Commerce subcommittee in Washington, D.C., that the company will not begin to recall or repair the rigged diesel cars until 2016. Horn said the recall process will take at least a year to complete.

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